Investment Policy Statement For Defined Contribution Plan

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About this template
The Investment Policy Statement for Defined Contribution Plan under USA law is a legal template that outlines the guidelines and objectives for managing an investment portfolio within a specific retirement plan. This document is typically designed for employers or plan sponsors who offer defined contribution plans such as 401(k)s to their employees.

The template includes a comprehensive set of provisions that define the investment policy and strategy to be followed. It covers various aspects related to investment options, risk management, and compliance with the applicable laws and regulations. The primary purpose of this template is to provide a clear and consistent framework for the fiduciaries responsible for overseeing the plan's investments.

Key sections within the document may include:

1. Introduction and Purpose: This section provides an overview of the purpose and goals of the investment policy statement and highlights the legal obligations and responsibilities of the plan fiduciaries.

2. Objectives and Guidelines: It outlines the investment objectives and risk tolerance for the defined contribution plan. This section may include provisions such as asset allocation targets, expected returns, and liquidity requirements.

3. Investment Options and Strategies: This section lists the allowable investment options available to plan participants. It may also outline the investment strategies to be utilized, including those related to diversification, active or passive management, and socially responsible investing.

4. Monitoring and Review: This section establishes the process for regularly monitoring and reviewing the plan's investment options, performance, and compliance with legal requirements. It may include guidelines for selecting and reviewing investment managers, as well as periodic reporting requirements.

5. Risk Management and Compliance: This section addresses the risk management practices, such as the establishment of risk limits and procedures for ongoing monitoring and reporting. Additionally, it ensures compliance with all relevant laws and regulations pertaining to retirement plans, such as the Employee Retirement Income Security Act (ERISA).

6. Amendments and Termination: This section outlines the procedures to be followed for making amendments to the investment policy statement and the conditions under which the plan can be terminated.

The Investment Policy Statement for Defined Contribution Plan template is a vital tool for maintaining transparency, minimizing fiduciary liability, and ensuring that the plan's investments align with the best interests of plan participants, as required by the Employee Retirement Income Security Act (ERISA) and other applicable laws.
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